truba college of engineering 2

8/6/2019 Truba College of Engineering 2

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TRUBA COLLEGE OF

ENGINEERING &TECHNOLOGY, INDORE

DEPARTMENT OF MANAGEMENT STUDIES

(DEVI AHILYA VISHWAVIDYALAYA INDORE)

A MAJOR RESEARCH PROJECT ON:

A ANALYTICAL STUDY OF STOCK MARKET &

THEIR SEGMENTS

(For the partial fulfillment of the requirement for award of the degree of Masters of Business

Administration [Full Time] 2years Programme 2009-11

GUIDED BY: PREPARED BY:VIKAS JAIN PRASHANT GOLESenior lecturer (Finance) & Head Academic MBA (FT) 4Th SemesterTruba College of Engg. & Tech. Roll No. - 09170010


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DECLARATION

I, the undersigned Mr. PRASHANT GOLE declare that this Research

Project A Analytical Study of Stock Market and Their

Segments Is based on my original work and my indebtness to otherwork, publications has been duly acknowledged at relevant places.

SUBMITTED BY: GUIDED BY:

PRASHANT GOLE VIKAS JAIN

MBA 4th Sem Senior lecturer (Finance)

Roll No.09170010 & Head Academic

Department of Management Studies

TRUBA College of Engineering & Technology, Indore


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CERTIFICATE

This is to certify that Mr. PRASHANT GOLE a student of MBA (FT)

2 years semester 4 from Truba College of Engineering and Technology,Indore (M.P.) has completed his Research Project on the topic A

Analytical Study Stock Market and Their Segment under my guidance

and supervision and his work is original and genuine.

Prof: VIKAS JAIN

Senior lecturer (finance)

Head Academic

TRUBA College of Engineering & Technology

Indore [MP]


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ACKNOWLEDGEMENT

The duration of the project report was the one etched in my memory for the long

time to come. I do have certain people to thank for it being a memorable

experience.

Dr. Ritu Joshi (Head of the Department) has been a source of inspiration and I

would like to thank her in all my humbleness.

Mr. Vikas Jain my guide during the project period has been the ever present pillar

of support and guidance throughout. I am indeed indebted to him for the

experience and information he shared with me. His suggestions and comments

have made the report more valuable.

I would like to thank my family members, my friends and entire staff of Truba

College of Engineering and Technology for making the atmosphere amicable and

makes me feel at ease at the time of stress.

At last I am thankful to all those persons who help me directly and indirectly to

cover the wide aspect of Research Project.

With Sincere Thanks

Prashant Gole


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CONTENTS

CHAPTER-1: Introduction of Study

CHAPTER-2:An overview of Stock market

CHAPTER-3:Introduction of Indian Stock market

CHPAPTER-4: the organizational set up of stock market

CHAPTER-5: product & segment in Stock market

CHAPTER-6: performance of stock market

CHAPTER-7:Analysis & Interpretation

CHAPTER-8: Findings, conclusions & suggestions

Bibliography


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CHAPTER-1

Introduction of

Study

INTRODUCTION


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Stock exchanges to some extent play an important role as indicators, reflecting the

Performance of the country's economic state of health. Stock market is a place

where securities are bought and sold. It is exposed to a high degree of volatility;prices fluctuate within minutes and are determined by the demand and supply of

stocks at a given time. Stockbrokers are the ones who buy and sell securities on

behalf of individuals and institutions for some commission.

T HERE ARE TWO TYPES OF MARKETS IN INDIA

Money market Capital Market

MONEY MARKET

Money market is a market for debt securities that pay off in the short term usually less

than one year, for example the market for 90-days treasury bills. This market

Encompasses the trading and issuance of short term non equity debt instruments

Including treasury bills, commercial papers, bankers acceptance, certificates of Deposits,

etc. In other word we can also say that the Money Market is basically concerned with the

Issue and trading of securities with short term maturities or quasi-money instruments. The

Instruments traded in the money-market are Treasury Bills, Certificates of Deposits

(CDs), Commercial Paper (CPs), Bills of Exchange and other such instruments of

short-term maturities (i.e. not exceeding 1 year with regard to the

original maturity)

CAPITAL MARKET


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Capital market is a market for long-term debt and equity shares. In this market, the

Capital funds comprising of both equity and debt are issued and traded. This also

Includes private placement sources of debt and equity as well as organized markets like

stock exchanges.

Capital market can divided in two segment -

primary market

Secondary Market

PRIMARY MARKET

In the primary market, securities are offered to public for subscription for the purpose Of

raising capital or fund. Secondary market is an equity trading avenue in which Already

existing/pre- issued securities are traded amongst investors. Secondary Market could be

either auction or dealer market. While stock exchange is the part of an auction market,

Over-the-Counter (OTC) is a part of the dealer market. In addition to the traditional

sources of capital from family and friends, startup firms are Created and nurtured by

Venture Capital Funds and Private Equity Funds. According to the Indian Venture

Capital Association Yearbook (2003), investments of $881Million were injected into 80

companies in 2002, and investments of $470 million were injected into 56 companies in

2003. The firms which received these investments were drawn from a wide range

of industries, including finance, consumer goods and health.The growth of

the venture capital and private equity mechanisms in India is critically linked to their

track record for successful exits. Investments by these funds only Commenced in recentyears and we are seeing a rapid buildup in a full range of Channels for exit, with a mix of

profitable and unprofitable outcomes. This success with Exit suggests that investors will

allocate increased resources to venture funds and Private equity funds operating in India,

who will (in turn) be able to fund the creation of New firms.


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SECONDARY MARKET

Secondary Market refers to a market where securities are traded after being initially

Offered to the public in the primary market and/or listed on the Stock Exchange.

Majority of the trading is done in the secondary market. Secondary market comprises

of equity markets and the debt markets.For the general investor, the secondary market

provides an efficient platform for Trading of his securities. For the management of the

company, Secondary equity markets serve as a monitoring and control conduitby

facilitating value-enhancing control activities, enabling implementation of incentive-

based management contracts,And aggregating information (via price discovery)

that guides management decisions. A bit about history of stock exchange they say

it was under a tree that it all started in 1875.Bombay Stock Exchange (BSE) was the

major exchange in India till 1994.National Stock Exchange (NSE) started operations in

1994.


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LITERATURE REVIEW

Stock market is volatile market it depend on past data and fundamental research.

The research here is a type of descriptive research hence the literature used by me

will be qualitative which would deal with certain studies the literature would be

collected from the journals, newspaper, magazines and websites which would Help in

enhancing the accuracy & reliability of my research all the data sources used here

would be secondary in last year study the topic is comparative analysis of national

stock exchange with new York stock exchange it is basic of the topic is compare

the national stock exchange and what is the the different thing in Indian market and

new York market new York stock exchange it is the different of my study I am study

forA analytical study of stock market and their segment it is basically depend on

technically and fundamental research of the company share which is listed in stock

market


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THE OBJECTIVE OF THIS PROJECT

My objectives for this project are:

1) To study volatility in Indian stock market while taking SENSEX of Bombay stockexchange as a source of secondary data which broadly represent Indian stock market

along with NIFTY of National stock exchange.

2) To study the factors which are making Indian stock market volatile?

3) To furnish institutional material relevant for understanding the environment in

which stock market fluctuation are occurring.

4) TO Get information from the research to learn more about the stock market;

5) TO Investigate the effects of the trading stratagem through the process of the

trading simulation;

6)Establishing a nationwide trading facility for all types of securities;

7) Ensuring equal access to investors all over the country through an appropriate

communication network


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RESEARCH METHODOLGY

To conduct the market research first of all its necessary to create research design.

Research design is basically a blue print of how a research is to be conducted.There are three types of approaches used during the any research-

1) Exploratory

2) Descriptive

3) Experimental

During this research descriptive and exploratory approach is taken into consideration

because of the availability of relevant information to describe the relationship

between the marketing problem and the available information.

Sources of data

Data used in this study is of secondary in nature. Sensex and Nifty is taken as

asource of information which widely describes Indian stock market. Here monthly

prices of both indexes are taken for the study purpose.

Types of data

Primary data- The primary sources of data refer to the company groth rate

&company share in the market it first data to collect by company history

Secondary data- collect by books News paper and magazines, Internet.


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SCOPE

This study can be used by investors, traders and other professionals as a supplement

to their own research. The market that deals in shares and stocks can be depicted as afluid that supports the probability factors of density and viscosity at any possible

time slot. So trading with such unexpected scenario can be tough and sketchy if an

individual is not at all updated with these abrupt changes of the share market. In

online share trading interface of the user with the market at maximum availability

can yield an effective result to his trading. Such a facet demands high speed

connection of the Internet for market notification so that the platform of trading can

be captured with snapshots that will keep track of every second change of the same


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LIMITATION

Generally speaking, when people think of the money that can be

made from the stock market, most think of the buying and selling ofstocks. This is a very limited view that conflates the entire of the

stock market investment field down to mere stock value. However, it

is in trading options where real money can be made from the stock

market.

Trading optionsis far more interesting simply because an option is a

much more interesting investment mechanism. An option is a

derivative investment instrument, meaning its value is derived from

another investment, namely stock. What this means is that an

options value is somewhat related to the value of stock.

The reason why trading options are so lucrative is because they

allow a trader to reserve the right to purchase or sell the underlying

stock within a specific time frame, but without obligating him or her

to do so. For example, when you have a call option for a certain

companys stock it means that you reserve the right to purchase the

stock just before it goes up in value. However, there is a deliberate

time limit on an option, which means they are not all-powerful and

do not allow you to reserve the stock forever.
http://www.tradingtrainerblog.com/three-rules-for-option-trading/http://www.tradingtrainerblog.com/three-rules-for-option-trading/


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CHAPTER-2

An overview of

stock market


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INDIAN STOCK MARKET OVERVIEW

Indian Stock Markets are one of the oldest in Asia. Its history dates back to nearly

200 years ago. The earliest records of security dealings in India are meager and

obscure. The East India Company was the dominant institution in those days and

business in its loan securities used to be transacted towards the close of the

eighteenth century.Thus, at present, there are totally twenty-one recognized stock

exchanges in India excluding the Over The Counter Exchange of India Limited (OTCEI)

and the National Stock Exchange of India Limited (NSEIL).

ORIGIN OF INDIAN STOCK MARKET

The origin of the stock market in India goes back to the end of the eighteenth century

when long-term negotiable securities were first issued. However, for all practical

purposes, the real beginning occurred in the middle of the nineteenth century after the

enactment of the companies Act in 1850, which introduced the features of limited

liability and generated investor interest in corporate securities.

An important early event in the development of the stock market in India was the

formation of the native share and stock brokers 'Association at Bombay in 1875, the

precursor of the present day Bombay Stock Exchange. This was followed by the

formation of associations/exchanges in Ahmedabad (1894), Calcutta (1908), and Madras

(1937). In addition, a large number of ephemeral exchanges emerged mainly in buoyant

periods to recede into oblivion during depressing times subsequently.

Stock exchanges are intricacy inter-woven in the fabric of a nation's economic life.

Without a stock exchange, the saving of the community- the sinews of economic progress

and productive efficiency- would remain underutilized. The task of mobilization and

allocation of savings could be attempted in the old days by a much less specialized

institution than the stock exchanges. But as business and industry expanded and the


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economy assumed more complex nature, the need for 'permanent finance' arose.

Entrepreneurs needed money for long term whereas investors demanded liquidity the

facility to convert their investment into cash at any given time. The answer was a ready

market for investments and this was how the stock exchange came into being.

Stock exchange means any body of individuals, whether incorporated or not, constitutedfor the purpose of regulating or controlling the business of buying, selling or dealing insecurities. These securities include:

(i) Shares, scrip, stocks, bonds, debentures stock or other marketable securities of a likenature in or of any incorporated company or other body corporate;

(ii) Government securities; and

(iii) Rights or interest in securities.

Brief History of Stock Exchanges

Do you know that the world's foremost marketplace New York Stock Exchange (NYSE),

started its trading under a tree (now known as 68 Wall Street) over 200 years ago?

Similarly, India's premier stock exchange Bombay Stock Exchange (BSE) can also trace

back its origin to as far as 125 years when it started as a voluntary non-profit making

association.

News on the stock market appears in different media every day. You hear about it any

time it reaches a new high or a new low, and you also hear about it daily in statements

like 'The BSE Sensitive Index rose 5% today'. Obviously, stocks and stock markets are

important. Stocks of public limited companies are bought and sold at a stock exchange.

But what really are stock exchanges? Known also as the stock market or bourse, a stock

exchange is an organized marketplace for securities (like stocks, bonds, options) featured

by the centralization of supply and demand for the transaction of orders by member

brokers, for institutional and individual investors.

The exchange makes buying and selling easy. For example, you don't have to actually go


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to a stock exchange, say, BSE - you can contact a broker, who does business with the

BSE, and he or she will buy or sell your stock on your behalf.

TRADING PATTERN OF THE INDIAN STOCK MARKET

Trading in Indian stock exchanges is limited to listed securities of

public limited

companies. They are broadly divided into two categories, namely,

specified securities

(forward list) and non-specified securities (cash list). Equity shares of

dividend

paying, growth-oriented companies with a paid-up capital of at least

Rs.50 million

and a market capitalization of at least Rs.100 million and having more

than 20,000

shareholders are, normally, put in the specified group and the balance

in no specifiedgroup. Two types of transactions can be carried out on the Indian stock exchanges: (a)

spot delivery transactions "for delivery and payment within the time or on the date

stipulated when entering into the contract which shall not be more than 14 days

following the date of the contract: and (b) forward transactions "delivery and

payment can be extended by further period of 14 days each so that the overall period

does not exceed 90 days from the date of the contract". The latter is permitted only in

the case of specified shares. The brokers who carry over the outstanding pay carry

over charges (can tango or backwardation), which are usually determined by the rates

of interest prevailing. A member broker in an Indian stock exchange can act as an agent,

buy and sell securities for his clients on a commission basis and also can act as a trader or

dealer as a principal, buy and sell securities on his own account and risk, in contrast with

the practice prevailing on New York and London Stock Exchanges, where a member


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can act as a jobber or a broker only.The nature of trading on Indian Stock Exchanges are

that of age old conventional style of face-to-face trading with bids and offers being made

by open outcry. However, there is a great amount of effort to modernize the Indian stock

exchanges in the very recent times.

CHaPTER-3Introduction of

stock market


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INDIAN STOCK MARKET

Stock markets refer to a market place where investors can buy and sell

stocks. The price at which each buying and selling transaction takes is

determined by the market forces (i.e. demand and supply for a

particular stock).

Let us take an example for a better understanding of how market

forces determine stock prices. ABC Co. Ltd. enjoys high investor

confidence and there is an anticipation of an upward movement in its

stock price. More and more people would want to buy this stock (i.e.

high demand) and very few people will want to sell this stock at current

market price (i.e. less supply). Therefore, buyers will have to bid a

higher price for this stock to match the ask price from the seller whichwill increase the stock price of ABC Co. Ltd. On the contrary, if there

are more sellers than buyers (i.e. high supply and low demand) for the

stock of ABC Co. Ltd. in the market, its price will fall down.

In earlier times, buyers and sellers used to assemble at stock

exchanges to make a transaction but now with the dawn of IT, most of

the operations are done electronically and the stock markets have

become almost paperless. Now investors dont have to gather at the

Exchanges, and can trade freely from their home or office over the

phone or through Internet.


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With over 20 million shareholders, India has the third largest investor base in the world

after the USA and Japan. Over9,000 companies are listed on the stock exchanges, which

are serviced by approximately 7,500 stockbrokers. The Indian capital market is

significant in terms of the degree of development, volume of trading and its tremendous

growth potential.

Worldwide Stock Markets

Source: ETIG, November 2010/ August 2007

Country % of world m-cap 2010 Market cap (US$ b) 2007

1 USA 29.70% 17,923

2 Japan 7.97% 4,615

3 China 6.89% 3,059

4 United Kingdom 6.72% 3,722

5 Hong Kong 4.97% 2,180

6 Canada 3.74% 1,620

7 France 3.55% 2,653

8 India 3.22% 1,090

9 Germany 2.84% 1,976

10 Brazil 2.84% -


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The National Stock Exchange of India Limited has genesis in the report of the High

Powered Study Group on Establishment of New Stock Exchanges, which recommended

promotion of a National Stock Exchange by financial institutions (FIs) to provide access

to investors from all across the country on an equal footing. Based on the

recommendations, NSE was promoted by leading Financial Institutions at the behest of

the Government of India and was incorporated in November 1992 as a tax-paying

company unlike other stock exchanges in the country. On its recognition as a stock

exchange under the Securities Contracts (Regulation) Act, 1956 in April 1993, NSE

commenced operations in the Wholesale Debt Market (WDM) segment in June 1994. The

Capital Market (Equities) segment commenced operations in November 1994 and

predations in Derivatives segment commenced in June 2000 It is the largest stock

exchange in India and the third largest in the world in terms of volume of transactions.

NSE is mutually-owned by a set of leading financial institutions, banks, insurance

companies and other financial intermediaries in India but its ownership and management

operate as separate entities. As of 2006, the NSE VSAT terminals, 2799 in total, cover

more than 1500 cities across India. In March 2006, the NSE had a total market

capitalization of 4,380,774 crore INR making it the second-largest stock market in South

Asia in terms of market-capitalization.

THERE ARE TWO INDEX IN STOCK MARKET

NSE(NATIONAL STOCK EXCHANGE )


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BSE(BOMBAY STOCK EXCHANGE)

NSE (NATIONAL STOCK EXCHANGE)With the liberalization of the Indian economy, it was found inevitable to lift the Indian

stock market trading system on par with the international standards. On the basis ofthe recommendations of high-powered Pherwani Committee, Industrial Development

Bank of India, Industrial Credit and Investment Corporation of India, Industrial

Finance Corporation of India, all Insurance Corporations, selected commercial banks and

others incorporated the National Stock Exchange in 1992.

NSE - A NEW IDEOLOGY

GENESIS

Capital market reforms in India have outstripped the process of liberalization in most

other sectors of the economy. However, the creation of an independent capital market

regulator was the initiation of this reform process. After the formation of the Securities

Market regulator, the Securities and Exchange Board of India (SEBI), attention were

drawn towards the inefficiencies of the bourses and the need was felt for better

regulation, discipline and accountability. A Committee recommended the creation of a

2nd stock exchange in Mumbai called the "National Stock Exchange". The Committee

suggested the formation of an exchange which would provide investors across the

country a single, screen based trading platform, operated through a VSAT network. It

was on this recommendation that setting up of NSE as a technology driven exchange

was conceptualized. NSE has set up its trading system as a nation-wide, fully

automated screen based trading system. It has written for itself the mandate to create

a world-class exchange and use it as an instrument of change for the industry as a


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whole through competitive pressure. NSE was incorporated in 1992 and was given

recognition as a stock exchange in April 1993. It started operations in June 1994, with

trading on the Wholesale Debt Market Segment. Subsequently it launched the Capital

Market Segment in November 1994 as a trading platform for equities and the Futures

and Options Segment in June 2000 for various derivative instruments.

NSE FAMILYNSCCLNational Securities Clearing Corporation Ltd. (NSCCL), a wholly-owned subsidiary of

NSE, was incorporated in August 1995 and commenced clearing operations in April1996. It was the first clearing corporation in the country to provide notation/settlement

guarantee that revolutionized the entire concept of settlement system in India. It was

set up to bring and 9 sustain confidence in clearing and settlement of securities; to

promote and maintain short and consistent settlement cycles; to provide counter-party

risk guarantee, and to operate a tight risk containment system. It carries out the

clearing and settlement of the trades executed in the equities and derivatives

segments of the NSE. It operates a well-defined settlement cycle and there are no

deviations or deferments from this cycle. It aggregates trades over a trading period T,

nets the positions to determine the liabilities of members and ensures movement of

funds and securities to meet respective liabilities. It also operates a Subsidiary

General Ledger (SGL) for settling trades in government securities for its constituents.

It has been managing clearing and settlement functions since its inception without a

single failure or clubbing of settlements. It assumes the counter-party risk of each

member and guarantees financial settlement. It has tied up with 10 Clearing Banks

viz., Canara Bank, HDFC Bank, IndusInd Bank, ICICI Bank, UTI Bank, Bank of India,

IDBI Bank and Standard Chartered Bank for funds settlement while it has direct

connectivity with depositories for settlement of securities. It has also initiated a

working capital facility in association with the clearing banks that helps clearing

members to meet their working capital requirements. Any clearing bank interested in

utilizing this facility has to enter into an agreement with NSCCL and with the clearing


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member. NSCCL has also introduced the facility of direct payout to clients account on

both the depositories. It ascertains from each clearing member, the beneficiary

account details of their respective clients who are due to receive pay out of securities.

It has provided its members with a front-end for creating the file through which the

information is provided to NSCCL. Based on the information received from members,

it sends payout instructions to the depositories, so that the client receives the pay out

of securities directly to their accounts on the pay-out day. NSCCL currently settles

trades under T+2 rolling settlement. It has the credit of continuously upgrading the

clearing and settlement procedures and has also brought Indian financial markets in

line with international markets. It has put in place online real-time monitoring and

surveillance system to keep track of the trading and clearing members outstanding

positions and each member is allowed to trade/operate within the pre-set limits fixed

according to the funds available with the Exchange on behalf of the member. The

online surveillance mechanism also generates various alerts/reports on any

price/volume movements of securities not in line with the normal trends/patterns.

IISLIndia Index Services and Products Limited (IISL), a joint venture of NSE and Credit

Rating Information Services of India Limited (CRISIL), was set up in May 1998 to

provide indices and index services. It has a consulting and licensing agreement with

Standard and Poor's (S&P), the world's leading provider of invest able equity indices,

for co-branding equity indices. IISL pools the index development efforts of NSE and

CRISIL into a coordinated whole. It is India's first specialized company which focuses

upon the index as a core product. It provides a broad range of products and

professional index services. It maintains over 70 equity indices comprising broadbased

benchmark indices, sectoral indices and customized indices. Many investment

and risk management products based on IISL indices have been developed in the

recent past. These include index based derivatives on NSE, a number of index funds

and India's first exchange traded fund.


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NSDLPrior to trading in a dematerialized environment, settlement of trades required moving

the securities physically from the seller to the ultimate buyer, through the seller's

broker and buyer's broker, which involved lot of time and the risk of delay somewhere

along the chain.

Further, the system of transfer of ownership was grossly inefficient as every transfer

involved physical movement of paper to the issuer for registration, with the change of

ownership being evidenced by an endorsement on the security certificate. In many

cases, the process of transfer took much longer than stipulated in the then regulations.

Theft, forgery, mutilation of certificates and other irregularities were rampant. All these

added to the costs and delays in settlement and restricted liquidity.

To obviate these problems and to promote dematerialization of securities, NSE joined

hands with UTI and IDBI to set up the first depository in India called the "National

Securities Depository Limited" (NSDL).

The depository system gained quick acceptance and in a very short span of time it

was able to achieve the objective of eradicating paper from the trading and settlement

of securities, and was also able to get rid of the risks associated with

fake/forged/stolen/bad paper.

Dematerialized delivery today constitutes almost 100% of the total delivery based

settlement.


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trading volumes on the Exchange showed robust growth. The Exchange provides an

efficient and transparent market for trading in equity, debt instruments and derivatives.

The BSE's On Line Trading System (BOLT) is a proprietary system of the Exchange and

is BS 7799-2-2002 certified. The surveillance and clearing & settlement functions of the

Exchange are ISO 9001:2000 certified.

Bombay Stock Exchange Limited (BSE) which was founded in 1875 with six brokers

has now grown into a giant institution with over 874 registered Broker-Members

spread over 380 cities across the country. Today, BSE's Wide Area Network (WAN)

connecting over 8000 BSE Online Trading (BOLT) System Trader Work Stations

(TWS) is one of the largest of its kind in the country.

With a view to provide efficient and integrated services to the investing public through

the members and their associates in the operations pertaining to the Exchange,

Bombay Stock Exchange Limited (BSE) has set up a unique Member Services and

Development to attend to the problems of the Broker-Members.

Member Services and Development Department is the single point interface for

interacting with the Exchange Administration to address to Members' issues. The

Department takes care of various problems and constraints faced by the Members in

various products such as Cash, Derivatives, Internet Trading, and Processes such asTrading, Technology, Clearing and Settlement, Surveillance and Inspection, Membership,

Training, Corporate Information, etc.

Bombay Stock Exchange Limited (BSE) which was founded in 1875 with six brokers


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cHPAPTER-4

THE

ORGANIZATIONAL

Structure OF

STOCK MARKET


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SEBISECURITY AND EXCHANGE BOARD OF INDIA

The SEBI is the regulatory authority established under Section 3 of SEBI Act 1992 to

protect the interests of the investors in securities and to promote the development of, and

to regulate, the securities market and for matters connected therewith and incidental

thereto. Government of India in the Department of Economic Affairs No.1 (44)SE/86,

dated the 12th day of April, 1988;

The Board shall consist of the following members, namely:-

1. A Chairman

2. Two members from amongst the officials of the Ministry of the Central

Government dealing with Finance (and administration of the Companies Act,

1956;) 2 of 1934

3. One member from amongst the officials of [the Reserve Bank

4. Five other members of whom at least three shall be the whole-time members

Departments of SEBI regulating trading in the secondary market

(1) Market Intermediaries Registration and Supervision department

(MIRSD)Registration, supervision, compliance monitoring and inspections of all marketintermediaries in respect of all segments of the markets viz. equity, equityderivatives,debt and debt related derivatives.

(2) Market Regulation Department (MRD)Formulating new policies and supervising the functioning and operations (except

relating to derivatives) of securities exchanges, their subsidiaries, and marketinstitutions such as Clearing and settlement organizations and Depositories(Collectively referred to as Market SROs).

(3)Derivatives and New Products Departments (DNPD)Supervising trading at derivatives segments of stock exchanges, introducing newproducts to be traded, and consequent policy changes


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POWERS & FUNCTIONS

1. Regulating the business in stock exchanges and any other securities markets.

2. Registering and regulating the working of stock brokers, sub-brokers, share

Transfer agents, bankers to an issue, trustees of trust deeds, registrars to an

Issue, merchant bankers, underwriters, portfolio managers, investment advisers

And such other intermediaries who may be associated with securities markets

in any manner.

3. Registering and regulating the working of the depositories, participants

Custodians of securities, foreign institutional investors, credit rating agencies and such

other intermediaries as the board may, by notification, specify in this

behalf.

4. Registering and regulating the working of (venture capital funds and collective

investment schemes) including mutual funds.

5. Promoting and regulating self-regulatory organizations.

6. Prohibiting fraudulent and unfair trade practices relating to securities markets.

7. Promoting investors' education and training of intermediaries of securities

markets.

8. Prohibiting insider trading in securities.

9. Regulating substantial acquisition of shares and take-over of companies.

10. Calling for information from, undertaking inspection, conducting inquiries and

audits of the stock exchanges, (mutual funds) and other persons associated

with the securities market and intermediaries and self- regulatory organizations

in the securities market.

11. Performing such functions and exercising such powers under the provisions of

securities contracts (regulation) act, 1956, as may be delegated to it by the

central government.


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12. Levying fees or other charges for carrying out the purpose of this section.

13. Conducting research for the above purposes.

CHAPTER-5products &

segments in stockmarket


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MAIN FINANCIAL PRODUCTS IN THE STOCK MARKET

Equity: The ownership interest in a company of holders of its common and

preferred stock. The various kinds of equity shares are as follows

Equity Shares: An equity share, commonly referred to as ordinary share also

represents the form of fractional ownership in which a shareholder, as a fractional owner,

undertakes the maximum entrepreneurial risk associated with a business

venture. The holders of such shares are members of the company and have

voting rights. A company may issue such shares with differential rights as to

voting, payment of dividend, etc.

Rights Issue/ Rights Shares: The issue of new securities to existing shareholders

at a ratio to those already held.

.Bonus Shares: Shares issued by the companies to their shareholders free of

cost by capitalization of accumulated reserves from the profits earned in the

earlier years.

Preferred Stock/ Preference shares: Owners of these kind of shares are

entitled to a fixed dividend or dividend calculated at a fixed rate to be paid

regularly before dividend can be paid in respect of equity share. They also enjoy

priority over the equity shareholders in payment of surplus. But in the event ofliquidation, their claims rank below the claims of the companys creditors,

bondholders / debenture holders.

Cumulative Preference Shares: A type of preference shares on which dividend


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accumulates if remains unpaid. All arrears of preference dividend have to be

paid out before paying dividend on equity shares.

Cumulative Convertible Preference Shares: A type of preference shares

where the dividend payable on the same accumulates, if not paid. After a

specified date, these shares will be converted into equity capital of the company.

Participating Preference Share: The right of certain preference shareholders to

participate in profits after a specified fixed dividend contracted for is paid.

Participation right is linked with the quantum of dividend paid on the equity

shares over and above a particular specified level.

Security Receipts: Security receipt means a receipt or other security, issued by

a securitisation company or reconstruction company to any qualified institutional

buyer pursuant to a scheme, evidencing the purchase or acquisition by the

holder thereof, of an undivided right, title or interest in the financial asset involved

in securitisation.

Government securities (G-Secs): These are sovereign (credit risk-free) coupon

bearing instruments which are issued by the Reserve Bank of India on behalf of

Government of India, in lieu of the Central Government's market borrowing

programme. These securities have a fixed coupon that is paid on specific dates

on half-yearly basis. These securities are available in wide range of maturity

dates, from short dated (less than one year) to long dated (upto twenty years).

Debentures: Bonds issued by a company bearing a fixed rate of interest usually

payable half yearly on specific dates and principal amount repayable on

particular date on redemption of the debentures. Debentures are normally

secured/ charged against the asset of the company in favour of debenture

holder.


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Bond: A negotiable certificate evidencing indebtedness. It is normally unsecured.

A debt security is generally issued by a company, municipality or governmentagency. A bond investor lends money to the issuer and in exchange, the issuerpromises to

repay the loan amount on a specified maturity date. The issuer

usually pays the bond holder periodic interest payments over the life of the loan.

The various types of Bonds are as follows-

Zero Coupon Bond: Bond issued at a discount and repaid at a face value. No

periodic interest is paid. The difference between the issue price and redemption

price represents the return to the holder. The buyer of these bonds receives only

one payment, at the maturity of the bond.

Convertible Bond: A bond giving the investor the option to convert the bond into

equity at a fixed conversion price.

Commercial Paper: A short term promise to repay a fixed amount that is placed

on the market either directly or through a specialized intermediary. It is usually

issued by companies with a high credit standing in the form of a promissory note

redeemable at par to the holder on maturity and therefore, doesnt require any

guarantee. Commercial paper is a money market instrument issued normally for

a tenure of 90 days.

Treasury Bills: Short-term (up to 91 days) bearer discount security issued by the

Government as a means of financing its cash requirements.


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STOCK MARKET SEGMENT IN NSE

NSE provides an electronic trading platform for of all types of securities for investors

under one roof - Equity, Corporate Debt, Central and State Government Securities,

TBills, Commercial Paper, Certificate of Deposits (CDs), Warrants, Mutual Funds units,

Exchange Traded Funds, Derivatives like Index Futures, Index Options, Stock

Futures, Stock Options, Futures on Interest Rates etc., which makes it one of the few

exchanges in the world providing trading facility for all types of securities on a single

exchange.

The NSE provides trading in 3 different segments:

Wholesale debt market (WDM)

Capital market (CM) segment and

The futures & options (F&O) segment.

Wholesale debt market (WDM)

The Wholesale Debt Market segment provides the trading platform for trading of a

wide range of debt securities which includes State and Central Government securities,

T-Bills, PSU Bonds, Corporate Debentures, CPs, CDs etc. However, along with these

financial instruments, NSE has also launched various products (e.g. FIMMDA-NSE

MIBID/MIBOR) owing to the market need. A reference rate is said to be an accurate

measure of the market price. In the fixed income market, it is the interest rate that the

market respects and closely matches. In response to this, NSE started computing and


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disseminating the NSE Mumbai Inter-bank Bid Rate (MIBID) and NSE Mumbai Inter-

Bank Offer Rate (MIBOR). Owing to the robust methodology of computation of these

rates and its extensive use, this product has become very popular among the market

participants.

Keeping in mind the requirements of the banking industry, FIs, MFs, insurance

companies, who have substantial investments in sovereign papers, NSE also started

the dissemination of its yet another product, the Zero Coupon Yield Curve. This helps

in valuation of sovereign securities across all maturities irrespective of its liquidity in

the market. The increased activity in the government securities market in India and

simultaneous emergence of MFs (Gilt MFs) had given rise to the need for a well

defined bond index to measure the returns in the bond market. NSE constructed such

an index the, NSE Government Securities Index. This index provides a benchmarkfor

portfolio management by various investment managers and gilt funds.

Capital market (CM) segment

The Capital Market segment offers a fully automated screen based trading system,

known as the National Exchange for Automated Trading (NEAT) system. This

operates on a price/time priority basis and enables members from across the country

to trade with enormous ease and efficiency. Various types of securities e.g. equity

shares, warrants, debentures etc. are traded on this system. The average daily

turnover in the CM Segment of the Exchange during 2004-05 was nearly Rs. 4,506crs.

NSE started trading in the equities segment (Capital Market segment) on November 3,

1994 and within a short span of 1 year became the largest exchange in India in terms

of volumes transacted.

Trading volumes in the equity segment have grown rapidly with average daily turnover

increasing from Rs.17 crores during 1994-95 to Rs.6,253 crores during 2005-06.

During the year 2005-06, NSE reported a turnover of Rs.1,569,556 crores in the

equities segment.

The Equities section provides you with an insight into the equities segment of NSE

and also provides real-time quotes and statistics of the equities market. In-depth


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information regarding listing of securities, trading systems & processes, clearing and

settlement, risk management, trading statistics etc are available here.

The futures & options (F&O) segment:

Futures & Options segment of NSE provides trading in derivatives instruments like

Index Futures, Index Options, Stock Options, Stock Futures and Futures on interest

rates. Though only four years into its operations, the futures and options segment of

NSE has made a mark for itself globally. In the Futures and Options segment, trading

in Nifty and CNX IT index and 53 single stocks are available. W.e.f. May 27 2005,

futures and options would be available on 118 single stocks. The average daily

turnover in the F&O Segment of the Exchange during 2004-05 was nearly Rs. 10,067 crs.


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CHAPTER-6

Performance ofstock market


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CHAPTER-7

analysis &

interpretation

Fundamental analysis

When you use fundamental analysis to buy stocks, you own a piece of a corporation,

not just a piece of paper. You are studying the corporation for you to decide which

stock is a worthwhile investment. You should be able to pick the stocks that can give


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you the best chance for profits by using fundamental analysis. You would like to

invest the stock

that has a reasonable price when you compare to its earnings. Fundamental analysis

is one of the most popular methods to determine the good bargain stocks.

Fundamental analysis is just a tool that helps you to find and evaluate the stock that

has offer good value. But this does not mean you can make a lot of money by using

fundamental24analysis. This is giving you a chance to find out whether fundamental

analysis is right for you

Technical analysis

Technical analysis relies on charts and graphs of the stocks for helping

you determine which stock to buy and sell. Technical analysis can also

use to forecast the future. You can make assumption of what might

happen in the future by looking at how the stock behaves in the past.

Technical analysis is the study of the stock price. Technical analysis can

be use by short-term investors to help them make decision for selling andbuying. Keep in mind that no matter what method you use, there is no

guarantee that you will make profit. It depends on how much work you

put into these stock picking methods.

Bibliography


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CHAPTER-6


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Findings,

conclusions &

suggestions

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